Abstract
This contribution is based on the proposition that labour productivity and income inequality are closely and significantly related; this relies on the proposition that that there is a strong relationship between productivity, inequality, economic growth and real wages. Productivity growth is the key determinant of how demand can grow without inflation, thereby reducing inequality of income, wealth and opportunity. Indeed, productivity is a significant factor in terms of inequality. It is also the case that the slowdown in productivity growth and increase in inequality that have occurred over a number of years now has affected many advanced economies, as well as others, and has become more pronounced following the Global Financial Crisis. Although weak productivity growth and increase in inequality predate the Global Financial Crisis and the subsequent Great Recession, they have both been exacerbated following them. We deal with these problems from a political economy perspective, and from the point of view that emphasises the structure and power in an economic system. We focus on the UK relevant experience along with other countries.
Highlights
We deal in this contribution with productivity and inequality from a political economy perspective, and from the point of view that emphasises the structure and power in an economic system
This contribution is based on the proposition that labour productivity and income inequality are closely and significantly related; this relies on the proposition that that there is a strong relationship between productivity, inequality, economic growth and real wages
Productivity growth is the key determinant of how demand can grow without inflation, thereby reducing inequality of income, wealth and opportunity
Summary
We deal in this contribution with productivity and inequality from a political economy perspective, and from the point of view that emphasises the structure and power in an economic system. The whole economy labour productivity (output per worker) fell by 4.3%2. It is suggested that between the GFC and 2012 labour productivity growth was 14% below the level of the. As Haldane (2017, Table 1) shows for the past decade, the average productivity growth has been negative This is very unusual, if not unique, historically. The question is what caused such a large and persistent fall in the UK labour productivity and in a number of other countries as well How could this ‘productivity puzzle’, and thereby inequality, be explained? In order to answer this question, we rely mainly on the UK experience in view of the large and persistent fall in labour productivity, and increase in inequality, as suggested above, but refer to other countries as necessary How could this ‘productivity puzzle’, and thereby inequality, be explained? In order to answer this question, we rely mainly on the UK experience in view of the large and persistent fall in labour productivity, and increase in inequality, as suggested above, but refer to other countries as necessary
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